Shutdown Mightn't Slow Court Action in AT&T/TW, Disney/Fox; Furloughs Near End?

Media deals making their way through federal court -- AT&T/Time Warner at the U.S. Court of Appeals for the D.C. Circuit and Disney/Fox at U.S. District Court in Manhattan -- shouldn't face a delay in judicial action due to the partial federal shutdown, antitrust and law experts told us. The month-long shutdown also isn’t seen having much effect on broadcast deals, analysts and attorneys told us.

The 35-day partial shutdown appeared to be on the verge of ending Friday after President Donald Trump backed a continuing resolution to reopen the FCC and other shuttered agencies through Feb. 15. The Senate quickly passed the CR under unanimous consent. The House was expected to have taken up the measure Friday night. The CR doesn't include funding for a border wall, which had been the sticking point. Democrats agreed as part of the CR deal to a bipartisan conference committee to negotiate on wall funding and other border security issues. Trump said “if we don't get a fair deal from Congress, the government will either" close or he will make good on his threat to declare a national emergency to use DOD money for the wall.

The timeline for reopening shuttered offices at the FCC and other agencies wasn't expected until after the CR approval. It's unclear whether an end to the shutdown would lead the House Commerce Committee to cancel a planned Thursday hearing on the hiatus' effect on the FCC and other agencies under the committee's jurisdiction (see 1901250004). House Commerce didn't comment.

If the shutdown ends and the FCC resumes normal operations by Tuesday, it plans to hold its monthly meeting Wednesday, as usual, in the Commission Meeting Room. If the shutdown continues through Tuesday, it plans to hold a conference call instead. In neither case does it plan votes on agenda items (see 1901230058).

FCC Commissioner Jessica Rosenworcel tweeted her hopes Friday for a quick end to the hiatus. “There is work to do” at the agency “to extend the reach of broadband, update public safety communications, expand the opportunities of wireless technology,” she said. “There are real challenges in the digital age,” but the FCC “needs to reopen to address them.” The tweet later was deleted, which Rosenworcel told us was an error.

DOJ and Courts

Elsewhere, the U.S. District Court in Manhattan says it's "open for business with full operations" and "proceedings will continue as scheduled until further notice." The Administrative Office of the U.S. Courts said the federal judiciary can go through maybe Feb. 1 but the Anti-Deficiency Act terms comes into play (see 1901230014).

DOJ's shutdown contingency plan earlier this month said the Antitrust Division head, as a presidential appointee, isn't subject to furlough. Also exempted are staff needed for ongoing civil litigation where there's no continuance, it said. It said 40 percent of the division's 655-person staff is exempted from furlough. AT&T and Disney didn't comment.

It's unlikely AT&T/TW would be decided before month's end since it has been only little more than seven weeks since oral argument, emailed William & Mary Law School professor Aaron-Andrew Bruhl, a federal courts expert. He said after Jan. 31, the D.C. Circuit likely will continue issuing decisions "at least for a while." He said the court will try to decide expeditiously since it gets harder to unwind a deal the more time that passes. The court granted Justice's motion to expedite the appeal, but that doesn't necessarily mean the court will issue its decision by then, "especially if the court is going to allow the merger anyway."

"All the work has already been done" on AT&T/TW, with judges already likely having met and decided and now working on the ruling itself, said antitrust expert George Hay, Cornell Law School professor. It's less clear whether the shutdown could push out the release date.

The D.C. Circuit likely wants to issue a decision before Feb. 28, and prior to the shutdown some had expected the ruling by now, emailed John Lopatka, Penn State University law professor. A decision by Feb. 28 still seems likely but it's not clear how severely the shutdown affected the D.C. Circuit, he said. AT&T pledged to keep some operational barriers between its MVPD arm and TW's Turner until Feb. 28 or the conclusion of DOJ's appeal, whichever came first (see 1806140041)

A former DOJ antitrust trial attorney said the D.C Circuit panel has had enough time to start drafting its opinion. As time goes on, the likelihood of a delayed decision increases, though rulings sometimes take months during normal operations, he said.

Broadcast Deals

Nexstar hasn't filed on its proposed buy of Tribune with the FCC, so no official clock started, noted S&P Global analyst Justin Nielson. Though the shutdown makes it difficult to check with regulators, it doesn’t keep companies from negotiating behind the scenes, and it’s likely that Nexstar has continued to firm up buyers for the expected divestitures, Nielson said. Divestitures could be worth close to $1 billion, he said. Nexstar didn’t comment.

Other broadcasters have likely also been using the enforced pause of the shutdown to assess opportunities, Nielson said. With “the books closed” on 2018 and coffers full of better-than-expected political revenue, additional time to negotiate and plan could be a positive, he said.

Getting deals through the regulatory process is difficult enough at the moment that a “30-day swing” is “acceptable,” said Kalil and Co. media broker Frank Kalil. Broadcasters tend to account for unexpected roadblocks when negotiating deals, said Fletcher Heald's Dan Kirkpatrick. Though the extra delay caused by the shutdown has to be accounted for in deal timing, it’s not been a barrier to transactions being negotiated, Kirkpatrick said. Since applications can’t be filed, broadcasters have more time to work on deals before they announce them, Kirkpatrick said.

Kalil is “sad” to admit that government dysfunction and a difficult regulatory road have become common enough to not be disruptive to takeovers. “I remember when the government helped,” Kalil said